TitleMax mines prime El Paso retail spaces

Expansion continues despite uncertainty about city ordinance

The nation's largest car title-loan company has put a giant footprint in El Paso this year while a city ordinance which would place some limits on such loans remains on hold.

Georgia-based TitleMax has 16 offices in El Paso, most of those opened this year in prime retail locations, as it rapidly expands in Texas and other areas of the country. It also operates one El Paso location under its TitleBucks brand.

Ann Baddour, senior policy analyst at Texas Appleseed, an Austin advocacy group involved in efforts to reform government regulations for payday and title loans, said some Texas cities' have ordinances with location restrictions for loan stores because of the negative connotation they can bring.

"The perception is that people (in neighborhoods with loan stores) are in an economic decline and can't get regular loans," Baddour said. "It (can) affect economic development."

Real estate broker Gallagher said a lot of good real estate in El Paso is leased to payday and title-loan providers.

"I don't know that it prevents other retailers from finding a location, but it does take a viable space off the market" for other possible retail uses, he said.

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TitleMax isn't the only title-loan company operating in El Paso, but its onslaught of store openings this year has made it the most visible. Its blue and red signs can be seen throughout the city. The company took over a former Church's Chicken location on Montana Avenue, a former Coleman Pharmacy location on Lee Trevino Drive, a former Chinese restaurant location on Gateway East Boulevard, near Cielo Vista Mall, a former pizza restaurant on Dyer Street, and so on.

"We've seen a huge expansion of TitleMax and (sister brand) TitleBucks in Texas," Texas Appleseed's Baddour said. "Four years ago, there were none (TitleMax and TitleBucks), and now there are over 230 (Texas) locations."

TMX Finance, the Savannah, Ga.-based parent company of TitleMax and TitleBucks, has more than 1,360 stores in 14 states, according to its brand Web sites. It added 307 new stores in a 12-month period in 2012-2013, most of those in Texas, Arizona, Virginia, and Illinois, the company reported in financial filings.

The company had about 415,000 customers and almost $498 million in title loans at the end of March, the latest public financial data available. The amount of loans make it the largest auto title lender in the nation, it reported.

The company apparently has recovered from its Chapter 11 bankruptcy filing almost five years ago. Ironically the reason the company cited in court documents for the bankruptcy was that it was unable to refinance a $255 million loan at a reasonable rate. Baddour said the company's rapid expansion at that time played a part in the bankruptcy declaration.

TMX Finance, like other title lenders, offer loans to people who can't get loans from banks and credit unions and have trouble getting credit cards. It does no credit checks, and as a Center for Responsible Lending report pointed out, car-title lenders "do little, if any, meaningful analysis of the borrower's ability to repay the loan."

"Texas is an unusual market because our regulations (on these type of lenders) is so lax," Appleseed's Baddour said. "They can charge unlimited fees, and this creates a lucrative market. And Texas has a lot of lower-income families."

TMX Finance officials at the company's Georgia headquarters did not return several calls made to them by the El Paso Times for comments for this story.

El Paso City Council in January approved an ordinance setting limits on title and payday loan amounts and limits on loan renewals and rollovers. But enforcement of the ordinance has been delayed until it can be brought back to Council, which had several new members elected in July.

El Paso City Attorney Sylvia Borunda Firth said she does not know yet if Council members want to move forward with the ordinance.

"At the mayor's request, I have met with local CSOs (credit services organizations). They have promised to provide some suggestions about how to improve the ordinance, but we have yet to receive their input," Firth said in an email.

The city also is monitoring litigation involving other Texas cities regulation of these types of loans, Firth reported.

Baddour said title loans are easy to get, but hard to get out of. And if a borrower can't repay a loan, he or she can lose their car, which often is their means of getting to work, she noted.

TMX Finance repossessed $6.4 million worth of vehicles in 2012, according to a company financial report.

Diane Standaert, legislative counsel for the Center for Responsible Lending in Durham, N.C., said having a lot of TitleMax and other car-title loan stores in an area are "signs customers are trapped in a long-term cycle of debt."

These lenders' "business model is dependent on people being unable to repay a loan" and having to return multiple times to renew loans and pay more interest and fees, she said.

TMX provides loans for up to 80 percent of the assessed value of the borrower's vehicle. The borrower must own the vehicle and have a title for it. Loan amounts had ranged from $500 to $5,000 in Texas, but recently the maximum amount was increased to $10,000.

The company provides loans in El Paso at interest rates from 8.99 to 14.99 percent, according to an employee at a TitleMax office in East El Paso. The loan also includes a loan fee, which can be as much as $553 on a $5,000 loan, the employee reported over the phone.